Bombay Rayon Apparels, a unit of fabric and shirt maker Bombay Rayon Fashions Ltd, is to buy the garment business of Leela Scottish Lace for INR1.55bn (US$38m).

Leela makes and exports ready-made garments to major international retailers such as Wal-Mart, and has 18 manufacturing plants in Bangalore, Chennai, Kochi and Thruvananthapuram. The company employs 16,000 people and has an annual capacity of around 12m garments.
Bombay Rayon said the deal will help to expand its higher margin apparel business.

The company has announced a number of moves so far this year in a bid to expand its capacity and widen its international customer base in the US and Europe.

In February, Bombay Rayon bought a 70% stake in the UK's DPJ Clothing Ltd, for about GBP1.54m. And in April it opened a new unit on the Doddaballarpur Apparel Park near Bangalore with the capacity to produce 22,000 garments a day.

Bombay Rayon has production facilities in New Mumbai, Silvassa, Sonale and Bangalore, and has the capacity to make 50m metres of fabric a year and 64,000 garment pieces per day. Its customers include C&A, DKNY, Liz Claiborne, Wrangler, Federated Stores and Guess.

In the three months to 31 March, the company's net profit soared by nearly 500% to INR215.5m from INR36.0 in the same period a year earlier, while sales tripled to INR1.7bn.